Taking contributions into account in public‑private comparison of pensions. Comment on “Differences between public and private sector pensions: an analysis based on career profile simulations”

Antoine Bozio

Economie et Statistique / Economics and Statistics, 2017, issue 491-492, 41-46

Abstract: [eng] Comparisons between pension schemes are often distorted by the use of simple and misleading indicators, such as mean pensions, or mean replacement rates. Aubert and Plouhinec (this issue), comparing the calculation rules in the public and private sectors for given careers, highlight that replacement rate comparisons are not unequivocal. Such work makes it possible to gain a better understanding of the mechanisms involved, which are more complex than they first seem, and to highlight the heterogeneity of situations in the civil service. However, such comparisons do not make it possible to assess the relative generosity of the pension schemes because they are, to a large extent, contributory. This comment suggests that while comparing contribution efforts is, admittedly, complex, it is not beyond the realms of feasibility. Such a comparison would offer the advantage of being distinct from the related, but separate, issue of comparing total pay (immediate and deferred) between the public and private sectors. Finally, in the light of that work, recommendations for reforms are made, aiming to transform the “pensions” Special Account (Compte d’Affectation Spéciale (CAS) “pensions”) into a pension fund for Central‑Government civil servants, and gradually to incorporate bonuses into the contribution base on which civil servants’ contributions are calculated.

Date: 2017
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